Shopify Plunges as Another Equity Raise Confuses Wall Street

(Bloomberg) -- Shopify sank as much as 11 percent to $143.02 after announcing its second equity capital raise this year, confounding some bulls.

The Canadian e-commerce company said in a statement last night it would sell 2.6 million Class A subordinate voting shares to strengthen its balance sheet, which follows a 4.8-million share offering from earlier this year. The latest equity raise priced at the bottom of the reported $154 to $156 range.

Shopify Plunges as Another Equity Raise Confuses Wall Street

Macquarie analyst Gus Papageorgiou, who has an outperform rating on the stock, noted that the balance sheet is already cash rich.

"At the mid-point of the offering price it suggests a raise of $387m, to an existing position of $1.6b and a dilution of approximately 2.4%," he wrote. "It is not obvious that the balance sheet needs further strengthening."

Shopify had 94.6 million shares outstanding as of Nov. 30. Shares have risen 59 percent year-to-date as of Thursday’s close, which would put it in the top 10 performers in the S&P 500 if the stock was a member of the index.

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